Kazuki Ohta Transcript
Clint Betts
Kaz, thanks so much for coming on the show to talk to us today about your journey to the United States, to building a company and all that type of stuff. Everything you've done, it's actually quite remarkable what you've built with Treasure Data. How did your journey begin? How did you get into all this?
Kazuki Ohta
Sure. So when I was in university, I majored in computer science and my professor built the world's fastest supercomputer at that time. So how chameleon computers combine into one system and run a lot of simulation programs on top of it. I was a part of the team that built the file system for that supercomputer that processes a ton of data. That gave me an opportunity to, one, realize the power of data and two, democratize the power of the data because the supercomputer can be only used by the government, but the data was exploding everywhere. So I was 25, I couldn't speak any English but had nothing to lose. So I came from Japan to Silicon Valley, started the software company together with my two co-founders, and we were just three people, but now we have more than a hundred million plus ARR annual recurring revenue with 700 people plus across many countries. So it's been quite a journey.
Clint Betts
Yeah. Let's go deeper on what you mean by democratizing data.
Kazuki Ohta
Of course. Yeah. So in the last 10 years we observed how a ton of data gets generated. But what we observed is, okay, the amount of data is exploding, but the talent and skill set of who can handle that data is very limited. And if you go back to when we started the company 12 years ago, there were not sufficient tools to process the data. You have to buy a bunch of hardware, expensive software, set up a network and a bunch of PhDs to process the data. But around that time, the evolution of the cloud just came in.
So our original idea was instead of buying all this expensive software and hardware, why don't we actually provide the data analytics stack in the cloud so that people can just start consuming it and then start analyzing the data immediately. And at that time we pitched this idea to many of the investors, they thought it's a bad idea because they're like, "Okay. Who will throw away the data to the cloud?" But I guess now everyone does. So I think we ride on that cloud trend really well.
Clint Betts
When you came to the United States, you didn't know English, which is now—
Kazuki Ohta
Yeah. I couldn't speak well.
Clint Betts
You speak better English than I do. How was that? What inside of you was like, "Yeah. I can do this. I can come to the United States"? And by the way, you've become one of the most successful entrepreneurs. It's really quite remarkable.
Kazuki Ohta
Yeah. It was quite a journey. When I came here, I was really afraid of picking up the phone with English too. So calling with PG & E, opening up the internet, I had a lot of struggles. But at the same time, I aspired to build a global software company.
I started my first company when I was 21, and it was all in Japan. So we scaled from five people to 40 people within five years. It was okay. But then I had an opportunity to work with a Silicon Valley based company who scaled from five people to 500 people in three, four years. And I was like, "Okay. I need to be here to start scaling the global software company." So it's like, okay, when you play baseball, you want to play an MLB. It's like if you are a software guy, you have to be in Silicon Valley, especially an entrepreneur.
So without thinking too deeply, I came here. And we pitched a lot of investors. They of course realized I cannot speak English. In fact, one of our angel investors, Bill Tai, actually said yes to our pitch and he decided to put in a couple hundred thousand dollars. He's actually an angel investor for Zoom, for example, or Canva. A really well known investor. But then I actually couldn't understand what he said, but my co-founder did. And after the meeting I asked my co-founder, "Hey, it looks like the meeting went well. How was it?" And my co-founder here is like, "Because he actually said yes to our investment." So that's a funny story. But long story short, for the first few years, I took English lessons for almost an hour and a half every single day. So I spent a lot of time just catching up on life here.
Clint Betts
What has it been like to scale from just two to three people in the company to as big as you are now? A hundred million ARR is no joke.
Kazuki Ohta
Yeah. No, of course, we had a lot of luck. A lot of people ended up supporting us. For example, Jerry Yang, who is the founder of Yahoo Search engine, actually helped us scale the company. We had an amazing investor too. I think what worked out really well is when we started the company, every day they're like, "Oh, there is a competitor coming out from an ex-Google employee, ex-Facebook employee." All the group of computer scientists from Stanford came out pursuing a similar idea.
And we were a group of people who came from nowhere. We didn't have a lot of background working for a large tech company, so no track record. And after 10 years a lot of competitors are gone. And I think when it comes to why this is happening, we really focus on customers. We listened to what they wanted, they guided and navigated us in the market and we really built our product and business for them. Not like we're trying to build it for ourselves and then let them use it. So the customer obsession really mattered for the last 10 years and will for the next 10 years too.
Clint Betts
How are you preparing for just the economic uncertainty that everyone's talking about heading into 2023? And also what advice would you have for other companies and other tech companies on how to future proof their business?
Kazuki Ohta
Yeah. It's a great point. I just had a company all hands, and I was telling this story about how great companies are building now or they get built in the difficult times. Google, Amazon survived this dotcom bubble. A lot of companies were built during the 2008 recession. What we're doing is just adapting to the change. It's not like Charles Darwin, but the strongest species is someone who can adjust.
And what we're doing is, for example, we're selling the product into mostly the marketing division. And obviously, for the next year, they got a lot of budget cuts, which puts our business into a little bit of risk. But what is happening is interesting. They're also increasing the investment into data and analytics. Because every CEO now is asking about, "Okay. How is our marketing campaign going?" Is any campaign providing positive ROI or negative ROI, right? So everything needs to be measured.
So I actually think, for the technology, a recession might actually help drive growth. At the same time, it's also true that many CEOs are actually also consolidating a lot of technologies. For example, in Treasure Data, I have 180 SaaS tools available or using, and we're actually consolidating into 130. So if your tool or business is not providing the actual business value, you will be consolidated or getting rid of it. So focus on what matters, bringing customer value, that really matters in this recession. And the stronger company or companies solving core problems or core hardcore business problem will only survive in this incoming economic uncertainty and impossible recession.
Clint Betts
Do you feel like we're in a period where focus is going to really, really matter for companies and leaders? Whereas previously we had the luxury of maybe being able to try various things within our companies or within our various organizations. But now it seems like focus is the name of the game and if you're not really focused internally on your operations and also how you're serving your customer, I don't think you get away with what was previously happening.
Kazuki Ohta
Yeah. I would say focus has been the most important thing for a startup because big companies are everywhere. You can only win if you have a focus and win the niche market and then start expanding. I think what has happened for the last 20 years or so for tech companies is that sometimes money becomes a commodity.
Everyone could have raised a ton of money and then everyone is becoming a unicorn. But what we're seeing is because of inflation, the federal rate going up, we're seeing a lot of compression in the company's valuation. So some companies actually raised the valuation or more than let's say billion dollar hundred X of your revenue size and now it's corrected into 8X, which puts us into a very difficult position for them that you have to grow additional 10X or 12X to sustain your valuation or you become profitable. And for a lot of CEOs and companies, all of a sudden, it's like, "Oh, okay, let's focus on it."
I actually came from a foreign country where my parents were actually running the little pharmacy business, and they have always been profitable. So I was like, "Okay. Those Silicon Valley companies were always losing money but still getting a lot of valuation." And it's also true that investors liked the growth and fastest pace of acquiring the market, but the climate changes and now it's different. They want profitability.
So for Treasure Data's case, we're being always about frugal. And then one part of our business is actually profitable, one part of our business is not where we think it's the growth area. So I think it's a business practice where you spend one data you need to make more. And it was not the case because investor all wanted the growth, but now it's profitability, but it will flip also probably after the recession, we come out from recession. So I think CEO needs to adjust how much you're investing in the circumstances of the economy.
Clint Betts
I think one of the things that must be interesting for you being in the data business is the risk of data breaches, data privacy, and all of those types of things. How do you think about data privacy and what would you have our listeners and viewers know about it?
Kazuki Ohta
Sure. So 10 years ago we had a lot of evolution in big data technology’s ability to collect and process a ton of data by using thousands or sometimes millions of cheap machines. And then I think that sentiment changed over the last few years. So consumers are now really worried about how their data gets used. So Europe has implemented GDPR. California now has implemented its own privacy local CCPA. 150 out of 200 countries now have consumer data protection laws. So it's not a big data era anymore where you collect everything about your consumers, use the data wherever you want. It's like you have to get the consent from the users, how the data gets collected and used, and use the data along with it.
So to do that you need to have sophisticated management of collecting the consent data, also customer data and then consumer data merging together. And that's also what we do as a company. At Treasure Data we provide a CDP customer data platform. On one end, we will democratize the use of customer data in the enterprise. Two, we will provide a tool and we need to be a custodian of that data as well. We don't want our customers and brands to abuse the consumer data. So you always need to think about this ethical use of the data.
Clint Betts
Being a venture-backed company, how do you think about exits going public? All of those types of things that were just happening at such an insane pace maybe three years ago, how do you think about all of that now?
Kazuki Ohta
Yeah. That's a great question. So as a venture backed company, VC is a business. They want an outcome, they want an exit. But there are certain things you can't really control, which is macroeconomy. So the IPO window got shut down last year and maybe hundreds of companies went public. In the tech sector like software, there's only two this year.
And it's being rumored that the IPO window will be shut down for the next year or at least six months to nine months. But obviously VC wants to have an exit at some point. So for the CEO, it's really you have to create a roadmap and outcome for the investor. But at the same time, I feel like we need to create a midterm, long-term thinking. If the company grows 10X from now, let's say we become a billion-dollar ARR company at some point, IPO is just a milestone, not the goal.
Clint Betts
Right. Yeah. That's right.
Kazuki Ohta
So the company has to build a long term sustainable growth engine rather than, "Okay. We'll make up some number for the IPO and be done." That doesn't happen.
Clint Betts
How has your leadership changed from when you were an early-stage startup with just a few employees to now where you're such a big company? How has your leadership style changed? How has your culture changed within the company?
Kazuki Ohta
Yeah. I learned a lot and obviously I was 25 and then I never ever worked for a larger company than Treasure Data, and that will be true for the future. And I would say my biggest learning is just having many great talents. So my leadership style is having someone who is better than you and the best scenario is they are bringing in lots of ideas, and I'll just pick it up based on the market and the trend and customers, instead of I'm telling them what to do. And I think it's just a realization.
And I had a, let's say, interesting story where I graduated from the University of Tokyo and when I started this company, "Who actually has the highest knowledge of databases in my network?" And he was a professor at the university. So I actually asked him to join the company for three years and then later on he joined. And he's a part of a core engineering team that processes trillions of records every day. So just hiring and building great talent, gathering the best minds of the world, that's my job rather than trying to do it by myself. So that's quite a lot of change from just three people doing everything by yourself and then now 700 people. My job is just to really attract the right talent.
Clint Betts
Yeah. Speaking of talent and recruiting, you mentioned like, "Hey, if you want to build a world-class tech company, you have to be in Silicon Valley when you first moved to the United States." I wonder if you still think that is true if being in Silicon Valley is still helpful in the recruiting front, because as you know, there's so much migration away from Silicon Valley, or at least it's talked about a lot going to Miami or Austin or these other places. How do you think Silicon Valley is changing, and what do you think the future of what was for sure the mecca of technology, where do you think that stands now?
Kazuki Ohta
Yeah. So 10 years ago when we started raising the money, a lot of capital for the tech is really centralized here in Silicon Valley. So it was almost a must to be here, right?
Clint Betts
Yeah, for sure.
Kazuki Ohta
And then as you talk after the pandemic, a lot of people get decentralized. So there's a few perspectives. First of all, investors are more willing to invest remotely. Although of course recently it shifted back to the point where they want to beat. So we see more opportunity abroad, but it's also true that Silicon Valley and the San Francisco area still have the highest probability of getting the investment. So if I were a founder desperately wanting to build something with the VC-backed model, I would be here because it has a higher chance.
Now when it comes to talent, there's two points. For the business side, sales, marketing, operation, G&A, there's a lot of talent here who can scale the business from zero to 10 million, to 30 million to 100 million and a billion. And then for each stage, you actually need different sets of skills and people who really like figuring out the first product market fit to scaling, to managing multiple business lines. That's a very different skill set.
But there are a lot of people in Silicon Valley who have done that in the previous generations. So if you look at the SaaS industry, software as a service that I'm in, for example, someone like Salesforce, Adobe, LinkedIn, Dropbox, those types of talent, especially on the business side and executive, they're all in Silicon Valley. So I'm convinced that to attract the talent, especially on the executive level, the SF area is better equipped.
Now on the R&D engineering side, it doesn't matter. So our engineering team is highly distributed with this open source model. Everyone can contribute to any software and then the best talent is everywhere. So having this highly remote, asynchronous, high-performing engineering team is really the trend. Although of course, you might want to have some core locations. For us, it's Silicon Valley, Tokyo, London, and Vancouver. But my point is I think the engineering talent tends to be more distributed than the business talent.
Clint Betts
One of the things we believe at CEO.com is the chances you give are just as important as the chances you take. And so many of us in our lives were given incredible chances that have led us to where we are today and without which maybe we wouldn't be where we are today. Who has given you a chance in your career and in your life?
Kazuki Ohta
Yeah. So it was interesting. I was a little bit of a stranger in my age group, I would say. I graduated in computer science from Japan. I was the only one who had joined and started a startup, everyone else joined a large company. So I didn't have anyone who I could ask for help for a business. So I have a lot of executives in the Japanese software ecosystem, maybe 10, 20 years older than me. They actually invited me to a lot of groups and meetups and then connected with me about many people. So one of the people, a person who is called Masaki was almost like my teacher, but he's now a CTO of the entire Japanese government.
Clint Betts
Oh, wow.
Kazuki Ohta
So he actually changed my life where he actually connected with many of the technology leaders in Japan that changed my life. And Bill Tai who is the founder, oh, sorry, investor for Canva and also Zoom. I talked about it. He invested in someone who couldn't even speak English. So I really cannot thank him enough. And Jerry Yang who is the founder of Yahoo, he is also the one who invested into us as an angel investor, gave a lot of critical business advice without a lot of bias. We were no one. He also admitted that, "Okay. Kaz, here with my co-founder, you are no one in Silicon Valley. You are the underdog. A lot of people who come out from all these large companies have an advantage, but you have to act like an underdog and be hungry about success."
Clint Betts
What's the future of Treasure Data? What does it look like five, 10 years from now?
Kazuki Ohta
Yeah. So if you look at the potential of Treasure Data, it's really exciting. So we provide the solution called CDP customer data platform, and our main buyer is Global 2000 or large enterprise. And if you look at the Global 2000, which is basically in the top 2,000 biggest companies on the earth, we only have 50 of them right now, somewhere around. And we already achieved $100 million ARR annual recurring revenue. So we have 1,950 to go, which is 40X from now. We got to have some work. And according to IDC, 50% of Global 2000 companies will adopt CDP in the next two to three years. So it's all an opportunity.
And from another number I can give it to is there's 8 billion people on the earth and 4.5 billion people are internet connected. So through the brands we have as a customer 450, we have the majority of that internet connected population's data. Although we don't own, we provide a system to process that data. Every single employee at Treasure Data has an impact to make billions of people's life happier, and safer, and more convenient through the data. But at the same time, we need to be a custodian of that data. We need to protect the data or honor privacy. So that's just an opportunity we have. So if you think about five years and 10 years, we have 1,950 companies to go to and that's a lot of work and opportunity.
Clint Betts
That's beautiful, man. Hey, thank you so much for coming on here, sharing your story, sharing your advice with our community. It means a lot. Kaz, what an honor to have you here. I'm sure we'll talk again at some point. Best of luck with Treasure Data and everything else you're doing.
Kazuki Ohta
Thanks for having me, Clint.